Sweet Sweat Equity

When I first learned, from my mentor and friend Larry Rosenberg, how I could actually make a 50%, 60%, 70% and even 100% return on my money, I was blown away because I knew exactly what those kind of returns could do to a small amount of money over time. And believe me back then, a small amount of money was all I had.

I remember vividly the first dirt bag property I bought.  It was a little house that was ugly on the outside and a mess on the inside. But this little ugly and messy house didn’t really need anything more than a major clean up, new carpet and a fresh coat of paint inside and out. The problem was I used almost all of my cash for the down payment.  So, I knew I couldn’t afford what contractors wanted to charge for the work and the materials that were needed to turn this dirt bag property into a beautiful cottage.

So what did that leave me? Sure, I probably could have borrowed enough to cover the contractor’s bids from relatives, friends or a bank but that would cut into my overall profits on the deal. So what did I do?  I just rolled up my sleeves and went to work.  Yes, it was some dirty, hard work but wow did it ever pay off!

I’m not a professional painter and I really didn’t have experience laying carpet but I quickly figured it out.  I can’t say that it was fun but when the project was done and I looked at that dolled up house it gave me quite a bit of satisfaction and a huge a sense of accomplishment.  But I also must say that my satisfaction soared to new heights when I sold the doll house for a big fat return on my investment and that, my friends, is what your own sweat efforts, or ‘sweat equity’, is all about. Wow. Can it ever pay some very handsome returns! And don’t ever forget how those returns of 50, 60 and even 100% can turn a small amount of money into millions over time.

I will admit that a bit later in my investing career, as things were speeding up, I finally got to the point when I figured that my time spent doing all that physical work was robbing me of time that could be much better spent with much larger rewards.  What I mean is that I realized at that point I could make more money by spending more time finding good deals and getting others to do the physical work, than doing the work myself. I could put in more time to make more offers, negotiate more deals and do the paper work needed to figure out what deals to buy and how to finance them. I traded sweat effort for brain effort.

This mental part really is also sweat equity. It’s actually the brain sweat that will give you the biggest returns on your money.  Both physical and mental sweat equity are critical and necessary and you can do both. You need to get to the right point in your growth so you can delegate the physical jobs to speed up your efforts and really grow those returns!

 

 

 

 

 

The Discipline Hurdle

If you truly want to be wealthy then it’s virtually a must for us average humans to do it through wise investing. But you might say, “Hey, what about the person who doesn’t have any money to invest, even in the smallest property?”  So the question becomes, how can you begin without a dime to your name?  Well, you build a nest egg. Of course, that begs the question, how do you get that beginning nest egg to start your investment program?

Most of us know that the traditional way to build a nest egg is through savings.  For many people that’s a big fat “ouch!” When you take a close look at the average American family, you see that the rate of savings has been in a steady downtrend the last few years.  When someone is asked why they don’t have any savings they usually respond with something like “I can’t afford to put any money aside. I barely break even. By the end of the month, nothing is left over.”

The people that say this are usually the same ones that, even after they get a raise, nothing changes. They are forever stuck at breaking even at the end of the month or, worse, going into debt.

So what’s the real problem here?  In a word it’s usually discipline, or more accurately, the lack of discipline.  When you are saying to yourself, “I just had to buy that new coat (or dress, suit, latest and greatest cell phone, computer, new car, etc.)”, or “We’ve been scrimping so long we deserve to treat ourselves to a very nice night out on the town or a vacation,” you are also saying that you’ll never be wealthy and are likely to be a ‘wage slave’ your entire life.

In order to be able to start an investment program, you must be tough on yourself and fully realize there is a huge difference in what you ‘need’ verses what you ‘want’. Once you have arrived at the point of understanding that, then you may well be on your way to great riches and maybe even wealth beyond your wildest dreams. That is what happened to me.  Unfortunately I can’t remember who or what book taught me the big difference between need and want, but once I learned that lesson and applied the needed discipline, I was able to save thousands of dollars in one year and that launched my investment program.

Of course, once you’ve built up that “nest egg” you must be wise and put it to work with great care.  When I began my investments, I was in a big hurry so I used a lot of OPM (Other People’s Money) as well as sweat equity which propelled my return on investment by leaps and bounds. I’ll talk more about just what worked for me in next week’s blog but in the meantime, consider the fact that your biggest hurdle to the wealth and financial security you are craving is one less vacation a year, one less shopping spree a month, one less night eating out each week and one less fancy coffee each day. When you think about it, that really isn’t too much to ask of yourself. Not for the chance to make a fortune.

After 37 years the same FINANCIAL FORMULA STILL WORKS

I was going through a bunch of old documents, notes, and papers the other day and came across the very first article ever written about me in the local newspaper.  The headline read “So Here’s How to Go About Making that First Million”. That was in the Salt Lake Tribune clear back on January 18, 1978

They quoted me as saying “…the best way to get rich with someone else’s money is through loans–mortgage and real estate loans.”

Now we fast forward 37 years and guess what?, That old method of getting rich, for most people, is still the best and most reliable way to make your first or second or fifth million. I did however get a big kick out of reading my example and some of the numbers of how you make a 100% return on a simple investment, such as a small house.  It was the small numbers that made me smile.  I had been quoted as saying:

“If you have $5,000 to put down on a $50,000 house and you borrow the other $45,000 to purchase the house, you can compound your investment by 100% if that house increases in value by $5,000 over one year”.

Most casual readers would quickly say or think, “Wait a minute, where can you find a house that you can buy for 50k?  They don’t exist anymore.” If you say that, of course you are right about finding a 50k house but that doesn’t mean the same formula used back then won’t work today.

That financial formula for great wealth is still the same today, but you do need to add something–simply a zero to each of the dollar numbers.  It’s the ratios that give you the 100% return on your money.  You are right if you are thinking that 10% increase in value won’t just happen by itself though. That is unless you are really lucky and we have 10% inflation in one year. But don’t count on that. However, you might be able to buy a house at a real bargain price then make cosmetic improvements which costs money and or your time and efforts but that may well increase the value by 10%.  Of course with the additional money you put to fix it, it may reduce your overall return to 50% or 75%.  But still, those kinds of returns will almost certainly make you a million or multi-millions over time.

Go ahead and google “compound table calculator” and see how quickly 50% or 75% returns increases $5,000 dollars into a million dollars! You may be shocked; especially what it turns into in 15 or 20 years.

 

 

 

 

It’s About Controllable Assets

I have a few more insights to share with you, hatched from Jeff’s “book report” on my book. On Addendum B–“When a Billionaire Speaks, I Listen” he commented on Curt Carlson’s advice. Jeff said, “Interesting that Fortune Magazine would say over 30 years ago that we’ve seen the last of the billionaires. But, that may be the typical thought of someone with limited thinking or a small world view.  While the oft-quoted statement by the commissioner of the US Patent Office in 1899 said ‘everything that can be invented has been invented’ may not be correctly attributed to him, it tells the same story. Carlson’s advice to get good people, then delegate is certainly right. The big wealth comes from spreading yourself around or at least by using ‘Other People’s Money’.  I always remember Aristotle Onassis, the Greek shipping magnate who married Jackie Kennedy, saying ‘borrow as much money as you can and always pay it back on time.’”

Hey Jeff, that’s some good stuff from your book report!  I think I will have to give you an A+.  I would add to Onassis’s comment about borrowing money with a very critical qualifier.  Yes, borrow as much money as you can but borrow it to purchase the “right kind of stuff” and by the right stuff I mean use it to purchase assets that appreciate in value and ideally assets that also provide you with cash flow returns as you watch and wait for their value to increase.

Yes, many stocks fit those parameters but for my money the assets that have worked by far the best for me have been income producing real estate (and that’s coming from a former successful stock broker.)  Why real estate rather than stocks?  The biggest reason is because with stocks you cannot control the company or the ups and downs and whims of the stock market. With the right kind of real estate you can at least have some degree of control over the property plus all that money you borrowed will, in the long run, be paid back by your tenants and if you have done it right, you will be collecting cash flow along the way.

So the take away here is that Onassis was partially right when he said borrow all the bucks that you can and always pay it back. But I say borrow all the money you can to buy appreciating assets that you have at least some control over, collect cash flow along the way and let your tenants pay off the money that you borrowed! I bet you can see just how smart that is!

 

 

Thanks a Billion!

I’ve been talking about the great success of the young university student that started with nothing and ended up with billions of dollars worth of income producing properties but this time,  I thought I would try to tease you into reading,  or re-reading, The Next Step to Waking up the Financial Genius Inside You by posting the thank you letter that Dell Loy Hansen sent me years after reading my book and which now prefaces the Pre-forward of the revised edition. This is just one of many thank you letters I have received and shows you how putting my principles to work really can change your life. :

Dear Mr. Haroldsen:

I have wanted to thank you for many years, but like most people I have not until now. When a friend told me you were going to republish your wonderful book, How to Wake Up the Financial Genius Inside You, I saw my chance to return a favor.

You woke up my “genius” over 25 years ago when I had a $200 VW and a ten-speed bike to my name. I wanted to own real estate to gain cash flow and future value as the mortgage loans paid off, but how? Your simple, straightforward plan allowed me, at 23 years of age, with no credit history or capital beyond a 2 week paycheck, to buy my first two homes for $200 down. I owned those homesf for 12 years them sold them for a $72,000 profit plus the years of cash flow I lived on.

When people ask, “can I still do this?” I smile. I truly believe it is actually easier today with better information, computers, more cash in the economy, and obviously, a great deal more real estate to choose from. I sincerely think I could do “better” today with an average intelligence and above average desire than 25 years ago.

For 25 years, I have pursued your principles and continued to grow in economic strength and knowledge. Today, the group of friends and family that I lead as chief operating partner own over one billion in real estate in Utah, Nevada, and California. The cash flows now exceed my dreams and my friends and family are economically secure and grateful. Life is so fulfilling as my options to travel and do charitable work are part of my every day life.

Thank you a million –or more appropriately, “Thanks a Billion!”

Your grateful student,

Dell Loy Hansen

CEO Wasatch Property Management, Inc.

Okay … did I tease you enough for you to read the book?  You could also do someone a huge favor by giving or sharing the book with them–it could change their life and yours too! Get yourself or a friend a copy here.

 

Fast Track to Billion$ with Friends

I hope you saw the great wisdom of Brian Tracy’s words of advice of to surround yourself with the ‘right people’ aka RP.  (See my February 13^th blog post.)  Those ‘right people’ are, for you, the people that have excelled in an area of life that you want to be super successful in as well.

When I was young it was all about money and, yes, a little bit of fame too. I must admit that excelling in the money department and my path to multi millions couldn’t have been done without the help, coaching and direction of certain RP in my life.  Those people were a god send. Knowing them paid off really big time for me.

But my climb up the money mountain has been eclipsed by a young man who read my first book, How to Wake Up the Financial Genius Inside You.  This university student started with nothing but quickly saw the genius behind the RP idea and was smart enough to approach a his own set of people. His RP helped push him to buy income producing property now worth3 billion dollars. Whereas I mainly approached people that could coach me and direct me this young guy approached super wealthy people and brought them in as partners.  In addition to his real estate empire he paid north of 70 million dollars in cash for the professional soccer team Real Salt Lake. This young man’s name is Dell Loy Hansen.

Part of the key to Dell’s success was taking good care of his partners. He made these great deals with them and so they in turn told others about their success including people with money. Having more people willing to invest with him allowed him to buy more and bigger properties.

So whatever your dreams are, if you want to hit it big, the path is much shorter and faster if you find the RP to surround yourself with and to work with. I also want to stress that there are many, many other good reasons to seek out and associate with those RP and for reasons much more valuable than money. I’m talking about the great life-long friendships you make and the wonderful warm relationships and experiences those alone can bring.

 

The Story of a Millionaire Goal

Last week I posted the front page story that was written about me and my plight when I was a poor 21 year old and how that wonderful couple Phil and Addie DiBenedetto took me into their house and let me sleep in their basement even though they had just met me.  This all happened when I was working construction in Rockford Illinois back in 1965.  I was very lucky to meet the DiBenedettos not only because they gave me a place to stay and feed me for free as well but maybe even more importantly, they seemed to really believe in me.
Re-reading that article reminded me that even as a very young man I had set my sights on becoming a millionaire.  I must admit that I had a tough time staying focused on that huge million dollar number when I was physically working myself to the bone at a measly $4.50 an hour. I do remember that I tried very hard to make every single day count by continuing to search, in what little spare time I had, for the “million dollar secret”.

I don’t think the DiBenedettos, even though they believed in me, ever really thought I could reach the “millionaire status or level”.  In fact years later as quoted in the newspaper story when they visited me in Denver, Phil and Addie said they “still remember Haroldsen and his wife lived in a broken down house. Finally, the young man ended up in Salt Lake City, where he was eventually fired from his job and on his way to making his first million.”

I loved the next part of the newspaper story. “When Addie and Phil visited Haroldsen for the first time in Salt Lake City, they had no idea he had fulfilled his dream of becoming a wealthy man.” In fact they were even worried that I couldn’t afford the long distance calls that I had been making to them prior to their arrival.  The best part was how blown away they both were when I drove them through the gate and into the long driveway of my home. It wasn’t a huge mansion but it was close, with over three tree-lined acres surrounding it.  They were so very proud of me and I had always been so very grateful to them for their willingness to reach out and help a young man who needed a place to stay but even more so for their very kind, loving and friendly support of his dream.

Those 5,840 days (16 years) between my meeting the DiBenedettos and the publishing of that article, were used to search out and discover the financial formula that can lift an ordinary person from being a meager wage earner to being a millionaire and, yes, even a multi-millionaire.  What is the secret?

Well, first it’s setting your mind firmly on your goal and never giving up on your objective and then working your tail off–or I should say, working your brain off since physical work and an hourly wage will never get you to the big numbers.  Hitting millions and multi millions is done by using financial leverage and people leverage. If you are not sure what that is, you should go back and read some of my earlier blogs that address that specifically and in detail. The secrets are all here:

http://ignitemylifenow.com/2013/01/11/the-power-of-leverage-and-compounding/

http://ignitemylifenow.com/2014/06/14/the-final-step-to-wealth/

http://ignitemylifenow.com/2014/07/25/the-simple-wealth-formula/

http://ignitemylifenow.com/2014/11/07/leverage-to-lift-your-profits/

 

The Rug Merchant of Tangiers

Today I’d like to add a footnote to last week’s blog on the theme of negotiation.  Many years ago I took a group of investors to Tangiers in Northern Africa, both for fun and for a seminar I was to put on for them. And what a seminar it was! The best part, however, was a lesson that was learned from a rug merchant in Tangier’s.

While on this trip we all took a tour. The talkative guides took us through the narrow, winding back streets, through the open markets with their pungent odors and all kinds of interesting and colorful people.  Then, after half an hour’s stop at the Kasbah, we finally ended up at a rug merchant’s large second-floor shop.

Even though I was paying for this tour, no one had bothered to tell me where we’d end up. It was there in the next hour or so that the big lesson was learned by all of us, a lesson in the art of negotiating.  We were all hot and tired but sitting comfortably on mounds of beautiful Oriental rugs. Our gracious host began telling the group about the uniqueness of his rugs then his troupe of articulate salespeople went on to sell their captive audience on the quality of the rugs.

Interestingly enough, they also explained the custom of haggling over price.  They would be offended if we were to accept their first price without some sporty bargaining. Priming the crowed into a jovial joking mood, the merchant asked someone to make an offer on a rug he said was for sale at $4500 dollars. One of the guys in my group offered $500 dollars. After a lot of back and forth the rug was sold for $1200 dollars. The buyer had been assured that its value was over $2000 dollars. I found out later that the buyer had it appraised in the USA for a mere $600 dollars.  Oops! There was lesson learned there for certain, a lesson that happens to be about one of the oldest tricks in the old negotiating handbook. That is, you start with a very high price to give the illusion of a bargain when the price is dramatically cut.

I’ve used this method many times on both the buyer’s side and when selling a property and you probably have too. You can read more about the rug merchant and related negotiation techniques in my book How to Wake Up the Financial Genius Inside You.

 

 

Using a little Jaw Jaw

I am in the process of updating 4 of the 8 books I’ve written, which has been a fascinating and mind opening task.  First of all, it’s quite a stunning experience to read your own words that were written many years ago and then to come across something that you find to be very profound. I found myself saying “Wow, this is a pretty good money making method and is quite inspiring stuff. Did I write this?” then I’m thinking,   “I can’t believe I wrote this. Where did this come from?” However, I must admit some of what I wrote also brings on thoughts like “Ugh! This is kind of simple minded and even stupid. I’ve got to change this!”

While updating and re-writing some of my book The Courage to be Rich, I was struck particularly hard by what I wrote about the huge power of negotiating and the incredible financial rewards that come just from smart and calculated discussions.  Yes, just by using your head and your words you can make huge financial returns on your money! Winston Churchill said “Jaw Jaw is better than war war” and I will add that, Jaw Jaw alone can make you 100% in returns on an investment too!

With good negotiations you can take a mere 5% discount combined with another 5% in earnings and come up with a 100% return on your money. Sound impossible? Not at all. I have done it myself a few times and others I know have done it. It’s in the numbers.

For example let’s say you found a very attractive piece of real estate and the seller was very motivated to sell it. With good negotiating skills you could convince him to sell the property for just 5% lower than its fair market value and maybe even a little beyond that and then you buy it with just 10% down. Now, using another round of skilled negotiations, you convince a buyer to pay 5% more than the property’s fair market value by making the property sound better than it may appear to be. Of course, fixing it nicely helps too. Then, guess what? You’ve just scored a 100% return on your money; you invested 10% then saved 5% on the buy and made 5% on the sale of it for a 10% profit, or 100% of what you put down on it!

If you get tripped up at the point where I say you are only investing 10% on the property, that’s not hard to do either. Further negotiations can convince the seller to carry the mortgage or you can use a bank for the mortgage and a signature loan so in total you have 90% financing.

Go ahead and run your own numbers on any size property with those percentages and you’ll always come out with that huge fat return of 100% on your money by just using your brain and your words to convince people of what great deal you make them. These are just some of the gems you can find in my books which are available online on places like Amazon and on my website.

Money Can Buy Novelty

It’s too bad that much of the time money, especially having a ton of it, gets a bad rap. The negative view of money probably started a very long time ago, maybe even before the Christian bible made the comment that “the love of money is the root of all evil.” I do believe that tons of money can ruin some people’s lives, especially if they come into that money overnight and not by their own hard work over many years. But let me talk about one super wonderful thing that money can do for you, especially if you are wise enough to do the right things with that money.

It seems that way too many people think that the best thing to do with lots of money is to go out and buy a lot of stuff, especially fancy and high status goods. But that stuff can quickly become worn out and/or very boring. Consider the following as an alternative and one that can, and will, jump start and excite your brain as well as lasting a very long time.

This is all about giving your brain a huge dopamine boost through experiencing new and novel things. You see, the human brain craves novelty, and money makes it so much easier to give yourself novel experiences. Gregory Berns in his book Satisfaction says, “Novel experiences are the surest route to satisfaction.”

As I write these words my wife and I are on a flight to the French Rivera. Just minutes ago we had lift off and as we did, believe me my brain got a big dose of dopamine and that’s just the beginning. We’ll be staying in Cannes at the Carlton Intercontinental Hotel and then later in another 5 star hotel in Nice. Then we’ll drive to the Italian town of San Remo to meet an old Swiss friend, Reto Moro, who I met 30 years ago on a tennis court in the south of Germany. We are visiting places, some of which are totally new to me or, in other words, ‘novel’.

Castles, old churches, new restaurants and all that I will see will pump my brain with dopamine. As you probably know dopamine is the natural brain chemical that makes you feel so very satisfied. I just love it. For years I didn’t have a clue about this thing called dopamine that was making me feel so good, but I certainly knew that I got a huge charge and brain boost by my visits to new places, so much so I came up with my bucket list of trying to visit every country in the world. I currently have hit 84 countries and my wife tells me that since I am now 70 years old I better pick up the pace—there are, at present, 196 countries in the world!

I guess I could have spent my money on fancy new cars and other expensive stuff but I’m pretty sure the novelty of a new car wouldn’t last very long. Traveling to new places has given me great memories that will last for many, many years, especially since I can easily re-stimulate my brain chemicals with so many pictures and videos!

The bottom line is, it’s true that money can’t necessarily buy happiness, but it can open up so many possibilities and make it easier to obtain more novel experiences. It gives one more time to carefully and creatively design, plan and carry out a wide range of novel experiences. So now I hope I have given you another good reason to push yourself to earn, save and invest your earnings.

 

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